In a new study, LendingTree revealed how most household budgets are heavily impacted by housing expenses. Many Americans find themselves in a difficult financial situation when factoring in necessities like groceries, transportation, electricity, and other monthly costs.
In 2025, the average monthly payment for a new mortgage dropped from $1,990 to $1,942, a 2.4% decrease. However, there are still a lot of affordability pressures. A popular measure for the burden of housing costs is that nearly 1 in 4 new borrowers spend at least 30% of their income on mortgage payments. Data shows which metro areas put the most financial burden on new homebuyers and where mortgage payments are rising or falling countrywide, and the results may be a surprise to some.
Mortgage payments for new homebuyers are somewhat lower than they were a year ago. The average monthly payment on a new mortgage decreased by 2.4%, from $1,990 in 2024 to $1,942 in 2025. Consequently, in 2025, the average new borrower’s monthly mortgage payment was 20.3% of their salary.
“Tying up that much of your income in housing payments can make things really challenging,” says Matt Schulz, Chief Consumer Finance Analyst of LendingTree and author of “Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life.”
“That’s money that can’t go toward other needs, like child care, or toward longer-term financial goals, like building an emergency fund, investing for retirement or saving for college,” Schulz added.
According to the report and LendingTree analysts, affordability problems still exist despite the downturn. A quarter of new borrowers (24.3%) set aside at least 30% of their monthly income for their mortgage, which is frequently regarded as a benchmark for stress related to housing costs.
Average new mortgage payments (U.S.):
| Average new monthly payment (2024) | $1,990 |
| Average new monthly payment (2025) | $1,942 |
| $ change | -$48 |
| % change | -2.4% |
| Average monthly income (2025) | $9,590 |
| Average % of monthly income | 20.3% |
| % spending at least 30% of income | 24.3% |
Note: Payments reflect principal and interest only and use the lowest-APR new mortgage offer per borrower. Offers are lender quotes and may not reflect final terms.
These numbers only include principal and interest payments. Many buyers are spending an even greater portion of their income on house expenses when homeowners insurance and property taxes are taken into account.
“Unfortunately, in many parts of this country, the only way for many people to purchase a home is to devote an outsized portion of their income to it,” Schulz said.
When it comes to purchasing a home, younger borrowers are under the most financial duress. According to data, Gen Z borrowers (those between the ages of 18 and 28) pay their mortgages with an average of 24.5% of their monthly income. In contrast, baby boomers (years 61 to 79) spend 19.5%, Gen Xers (ages 45 to 60) spend 18.2%, and millennials (ages 29 to 44) spend 20.3%. Interestingly, compared to millennials (21.7%) and Gen Xers (20.1%), over one-third (32.0%) of new Gen Z borrowers spend 30% or more of their income on principal and interest payments. 27.8% of baby boomers spend at least 30% of their income on mortgage payments.
Average new mortgage payments by generation (2025):
| Generation | Average new monthly payment | Average monthly income | Average % of monthly income | % spending at least 30% of income |
|---|---|---|---|---|
| Gen Zers | $1,722 | $7,029 | 24.5% | 32.0% |
| Millennials | $2,126 | $10,485 | 20.3% | 21.7% |
| Gen Xers | $1,915 | $10,547 | 18.2% | 20.1% |
| Baby boomers | $1,655 | $8,511 | 19.5% | 27.8% |
According to Schulz, younger borrowers who enter the property market should anticipate paying a higher percentage of their salary toward mortgages than previous generations.
“They typically earn less and have lower credit scores than older Americans, and that’s a difficult mix when you’re trying to buy a home,” Schulz said. “It also means that if you do qualify to get a home, you’re likely to put down a smaller down payment and face higher interest rates. Add it all up, and it can mean having a bigger monthly payment than you’d like.”
Regional Differences Play a Large Part in Mortgage Payments
California has the highest mortgage payments in the nation for new borrowers. In actuality, the Golden State is home to the five metro areas with the highest average monthly expenses. With an average monthly cost of $4,016, San Jose, CA, comes in at #1, followed by San Francisco ($3,850), Oxnard, CA ($3,401), Los Angeles ($3,366), and San Diego ($3,225).
California’s affordability issues are probably caused by a number of causes. The state’s home values increased dramatically between 2020 and 2022, making them substantially higher than those of much of the nation. Household salaries haven’t kept up with the rising cost of housing, even if prices have somewhat stabilized. Compared to 60% in 2019, only roughly 45% of California households were expected to be eligible for a mortgage on a low-income property in 2025. According to the California Legislative Analyst’s Office, the percentage drops to just 23% for mid-tier homes from 35% in 2019.
Top 10 Metros with the Highest Average New Mortgage Payments (2025):
| Rank | Metro | Average new monthly payment | Average monthly income | Average % of monthly income | % spending at least 30% of income |
|---|---|---|---|---|---|
| 1 | San Jose, CA | $4,016 | $16,280 | 24.7% | 36.6% |
| 2 | San Francisco | $3,850 | $15,713 | 24.5% | 37.7% |
| 3 | Oxnard, CA | $3,401 | $11,874 | 28.6% | 50.6% |
| 4 | Los Angeles | $3,366 | $12,455 | 27.0% | 45.1% |
| 5 | San Diego | $3,225 | $12,145 | 26.6% | 46.3% |
| 6 | Seattle, WA | $2,976 | $12,792 | 23.3% | 35.8% |
| 7 | Boston | $2,784 | $12,285 | 22.7% | 31.4% |
| 8 | Stockton, CA | $2,654 | $10,541 | 25.2% | 41.5% |
| 9 | New York | $2,615 | $12,511 | 20.9% | 26.9% |
| 10 | Washington, D.C. | $2,574 | $11,804 | 21.8% | 27.9% |
In the pricey state of California, monthly mortgage costs have also risen more quickly than rentals, making homeownership even more unattainable for many potential buyers. In addition to discouraging current homeowners from selling, high mortgage interest rates have kept inventories low for those who can afford to buy.
“California can certainly be a challenging place to buy a home,” Schulz said. “Sure, people in the state’s biggest cities typically earn more than people in other parts of the country, but housing costs can be outrageously high in those areas. That can easily leave someone house-poor or force them to make compromises they’d rather not make, such as settling for a smaller home or a longer commute—or even not being able to purchase a home at all.”
The South and Midwest are well-represented among the markets with the lowest average new mortgage payments, while California and East Coast metropolitan areas lead the rankings. Among the 100 metro areas in the survey, Toledo, Ohio, has the lowest average monthly payment ($1,297), followed by:
- Wichita, KS ($1,343)
- Akron, Ohio ($1,393)
- Columbia, SC ($1,439)
- Little Rock, AR ($1,440)
Approximately 25% of the 100 largest metro areas saw an increase in mortgage payments during the last year, despite a 2.4% decline in average mortgage payments nationwide. Notably, despite the fact that average payments in those areas are still lower than in many other parts of the nation, a number of Southern and Midwestern metro areas saw some of the largest increases.
The biggest rise was in Akron, Ohio, where average payments increased by 10.7%. Charleston, SC (6.7%), Augusta, GA (8.9%), and Toledo, Ohio (9.7%) come next. Despite the Midwest’s lengthy reputation for being reasonably priced, prices have increased due to a chronic lack of available properties and high buyer demand. Even in locations with historically lower housing costs, monthly payments have increased due to limited inventory and high mortgage rates.
Strong housing demand and population growth have increased home prices in many metro areas in the South. Southeastern states, such as Georgia and South Carolina, have experienced some of the biggest rises in housing costs. As a result, new borrowers’ monthly mortgage payments have increased.
Overall, some 10% of new borrowers in nationwide spend at least 40% of their income on principal and interest. Households that spend more than 50% of their income on housing expenses are classified as “severely cost burdened” under federal housing laws, which significantly reduces the amount of money available in their budgets for other necessities or unforeseen costs.
To read the full report, click here.
